For a small but probably growing number of California’s government workers, the worst-case scenario is here: The failure to adequately fund public pensions is leading to devastating reductions in their promised retirement benefits. If the pension problem were a cloud of carbon monoxide, there would be no more need to wait for a canary to keel over.
The average full career (30 years work) pension for a retired public employee in California was $68,673 in 2015, not including benefits. This is in comparison to the average pay (not including benefits) for an active full-time worker in the private sector in California, which in 2015 was $54,326, and to the maximum Social Security Benefit for a high wage earner retiring at age 66, which in 2015 was $32,244. Put another way, the average public employee retiree with 30 years of service collects a pension (not including benefits) that is 26% greater than the average pay for a non-retired full time private sector worker, and more than twice the maximum Social Security benefit.
The East Contra Costa Fire District (ECCFD) has financial problems because it pays more for retirement benefits than it does in salaries to current employees. With most of its staff eligible to retire on the 3% at 50 formula and at least two current retirees receiving more than $100,000 annually, the district is functioning as more of a retirement plan than as a firefighting unit. Rather than economize on its pension benefits, district leadership has closed fire stations and made repeated attempts to extract more taxpayer funds.
The hiring is expected to continue through mid-April and comes as the company prepares for spring, its busiest time of the year.
In yet another awkwardly rational response to government intervention in deciding what’s “fair”, the blowback from minimum wage demanding fast food workers has struck again. Wendy’s plans to install self-ordering kiosks in 1,000 of its stores – 16% of its locations nationwide.
The hits from CalPERS and CalSTRS will cost school districts $1 billion more next year, the Legislature’s budget analyst has calculated, markedly more than the $744 million in additional state and local revenue Brown’s budget proposes.
The AFL-CIO is dismissing dozens of staff members as part of a restructuring amid continuing declines in union membership and fresh political threats to labor rights.
L.A. County’s manufacturing sector has suffered massive job losses over the last decade, but a new report points to worse news — those positions have been replaced by jobs that pay less than half as much.
But perhaps the simplest step that could be taken immediately to advance the fight for $50 and reduce the skills gap is protecting the entry-level jobs that largely train the American workforce. In practice this means not pursuing minimum wage increases that destroy these opportunities. While only a small part of the workforce earns the minimum wage at a given time, a giant slice of it got its start at this level. Thousands of CEOs, including Jeff Bezos, Lloyd Blankfein, Warren Buffett, Michael Dell and even Barack Obama, began their careers at entry-level wage jobs.
A new teacher’s pension is supposed to be a perk. The truth is that for the majority of the nation’s new teachers, what they can anticipate in retirement benefits will be worth less than what they contributed to the system while they were in the classroom, even if they stay for decades. . . It’s not unfair to say that these systems now treat new teachers as sources of revenue for other people’s pensions rather than valued employees in their own right. For a nation that places great emphasis on equity, it is astonishing that so many states now tacitly endorse retirement systems that are inequitable to current and future generations of new teachers.
The reduced expectation, disclosed late Monday in documents from the largest U.S. public pension fund, is based on a lower-risk, lower-return asset allocation adopted by CalPERS in September and announced in December. . . Pension analysts are skeptical that funds can keep generating higher returns in the long run. Most funds are cash negative, meaning they are now paying out more money to retirees than they collect from current workers and employers.
The rate increase is expected to take $400 a year from the average salary of $40,000 for the new teachers. About $200 a year would have been taken if the earnings forecast had been lowered to 7.25 percent as actuaries recommended, a 0.5 percent rate increase. . . Ingram said school districts project that “before long” 25 to 33 percent of their general funds will be taken by retirement and health benefits. . . Carlos Machado of the California School Boards Association said his group expects the combined CalSTRS and CalPERS rate increases to add $1.8 billion to the annual $60 billion cost facing school districts.
“Actuaries are recommending that one of the state’s oldest public pension systems, the California State Teachers Retirement System formed in 1913, lower its investment earnings forecast from 7.5 percent to 7.25 percent. If the newly empowered CalSTRS board adopts the lower forecast next week, state rates paid to the pension fund would increase by 0.5 percent of pay, an additional $153 million bringing the total state payment next fiscal year to $2.8 billion.”
California faces a $76.67 billion cost to provide healthcare and dental benefits to retired state employees, state Controller Betty Yee reported Wednesday, an increase of $2.49 billion over the previous year’s estimate.
Public schools around California are bracing for a crisis driven by skyrocketing worker pension costs that are expected to force districts to divert billions of dollars from classrooms into retirement accounts, education officials said. The depth of the funding gap became clear to district leaders when they returned from the holiday break: What they contribute to the California Public Employees’ Retirement System, known as CalPERS, will likely double within six years, according to state estimates.